How Mastercard, Goldman Sachs And Other TradFi Titans Are Using Blockchain To Rewire Global Finance

Mastercard chief executive Michael Miebach wants to use blockchain tech selectively for things like... [+] Jamel Toppin for Forbes

“There will always be new payment technology,” says Michael Miebach, chief executive of Mastercard, the world’s second-largest credit card company. “First there were cards using ISO 8583 [ISO numbers refer to international standards] messaging technology, which is 50 years old, then real-time payments became real with ISO 20022. And then came blockchain, and we said okay, what would that solve? There’s a whole set of real-life problems out there that blockchain can solve.”

In late January, the 55-year-old Miebach told analysts and shareholders that his company had surpassed 2 billion “tokenized” transactions per month, up 38% in a year, and that Mastercard was enabling digital payments in 110 countries. The big benefit? Less fraud.

Today, tokenization at Mastercard means replacing the 16-digit number on your plastic credit card with a supersecure unique digital record for every transaction, without ever leaving behind your identity in the form of a credit card number. It’s not yet on a blockchain, but Mastercard is currently working with banks and merchants to tokenize a variety of assets, including deposits, which will be tracked on multiple public and private blockchains.

“You can tokenize anything,” Miebach says. “I think we’re going to have a world where everything will be tokenized and will be passed around in a safe fashion.”

Mastercard is one of 22 financial companies that made Forbes’ 2023 Blockchain 50 list of billion-dollar companies putting distributed-ledger technology to real use. Mastercard is also a prototypical corporate middleman. It raked in $22 billion in revenue and $10 billion in profit last year from the fees it charges merchants to, essentially, help customers spend their own money. In other words, Mastercard is exactly the type of company that crypto zealots love to hate.

But it is trusted by millions of merchants worldwide. And in the wake of Web3’s never-ending barrage of scandals, scams and swindles, trust is exactly what the sector needs. Smelling opportunity, blue chip financial giants, including BlackRock, JPMorgan and Fidelity, have become some of the biggest champions of the new technology.

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It’s been a tough year for crypto—and blockchain has not been spared. Here are some big company blockchain projects that have been shelved.

A.P. Moller-Maersk

TradeLens, the blockchain platform Maersk co-developed with IBM, was launched in 2018 to cut time and paperwork out of tracking containers as they move through global seaports. But achieving the necessary level of cooperation between competitors and countries proved impossible, so Maersk will shutter it this quarter.

Australian Securities Exchange (ASX)

After five years of trying to build a blockchain replacement for its aged settlement system, Australia’s primary stock exchange pulled the plug in November after Accenture found significant design flaws. ASX took a $170 million loss on the project.


The industrial conglomerate was using blockchain to digitize aircraft records and even had a marketplace for used aviation parts called GoDirect Trade. Development was halted as of November and staff working on the project have since left the company.

Silvergate Bank

The crypto-focused bank experienced a run related to the FTX blowout. Over the course of 2022, deposits shrank from $14.7 billion to $3.8 billion. Silvergate fired 40% of its staff and lost nearly a billion dollars. It also wrote down its purchase of Meta’s failed Diem cryptocurrency project.

“What do you need for blockchain to scale?” asks Miebach, whose company launched 35 new crypto-friendly debit and credit cards last year. “It scaled for traditional payments because people trust experience, they trust data privacy and they trust they won’t be taken for a ride.”

Other “TradFi” CEOs are right alongside Miebach, beating the crypto drum. In December David Solomon, the CEO of Goldman Sachs, penned an opinion piece in the Wall Street Journal headlined “Blockchain Is Much More Than Crypto,” in which the boss of Wall Street’s most iconic firm cautioned against dismissing the technology in the wake of the Sam Bankman-Fried/FTX fiasco. The crux of his argument? “Under the guidance of a regulated financial institution like ours blockchain innovations can flourish.”

“There’s a whole set of real-life problems out there that blockchain can solve.”

Big banks like Goldman have largely avoided directly investing in cryptocurrencies but have quietly been working with their underlying technology. “We see huge commercial opportunities,” says Mathew McDermott, head of digital assets at Goldman Sachs. In November, his 70-person team underwrote a €100 million bond offering for the European Investment Bank in conjunction with Santander and Société Générale. The process took just 60 seconds. Typically, a bond sale like this takes about five days.

“[There are] people who would like to continue to trade the crypto market, and we’re keen to [help] through derivatives or options,” McDermott adds. One strong piece of evidence pointing to the value of trust: In 2022, big unregulated crypto exchanges like Binance, Huobi and OKX saw volume fall by more than 25% through September, while CME, Chicago’s highly regulated futures trading exchange, saw increases of 62% in bitcoin futures and 80% in ethereum futures over the same period.

Likewise, Fidelity is seizing upon the crisis in crypto confidence by flooding Instagram feeds with advertisements for its soon-to-launch Fidelity Crypto. “Get on the early-access list to trade bitcoin and ethereum,” reads one promotion. “Start with the names you know, invest with a name you can trust.”

The nation’s oldest bank, 238-year-old BNY Mellon, already offers digital asset custody for U.S. asset managers and provides back-office services to 19 Canadian crypto ETFs and mutual funds. Like David Solomon at Goldman, Mellon’s chief executive, Robin Vince, took to the newspapers to announce the seriousness of his bank’s crypto plans, writing a December article in the Financial Times entitled “Time for a Reset of the Crypto Opportunity.”

JPMorgan’s 66-year-old CEO, Jamie Dimon, called cryptocurrencies “decentralized Ponzi schemes” last fall, but his bankers have been hard at work using blockchain tech to execute $550 billion in repurchase agreements since 2020.

“There will always be new payment technology.”

“The next generation for markets, the next generation for securities, will be tokenization,” insisted Larry Fink, chief executive of BlackRock—the world’s largest asset manager, with $8.6 trillion under management—at a DealBook conference in November. For now, BlackRock is mostly acting as a service provider for a select few so-called “crypto-native” companies. It has partnered with Coinbase to offer BlackRock’s thousands of institutional investor and wealth management customers access to bitcoin and other cryptocurrencies through its Aladdin portfolio management software. It also holds $34 billion in Treasury bills as reserves for Circle’s U.S. dollar–backed stablecoin, USDC.

While established financial institutions are shrewdly stepping forward to supplant crypto startups, there are worries among crypto industry purists over the future of blockchain technology. One schism: Web3 evangelists love open-source, decentralized “public” blockchains. Big enterprises (and totalitarian governments) prefer “private” blockchains precisely because they offer more control.

That remains true even after some big private blockchain projects failed spectacularly. In 2020, former Blockchain 50 member Honeywell began using private blockchain Hyperledger Fabric for buying and selling used aerospace parts. Development was halted as of November 2022. Maersk and IBM scrapped their TradeLens global shipping supply chain blockchain in November after hiring 19 staffers and spending more than four years on the project.

Public blockchains can offer advantages in terms of speed and cost. Private equity pioneer KKR, whose funds manage $496 billion worth of assets, recently opened its $4 billion Health Care Strategic Growth Fund to distribution via Avalanche, a fast public blockchain that boasts 4,500 transactions per second (Ethereum can still handle only 15). Other Avalanche users include CME Group, payments company FIS and Mastercard.

“I think we’re going to have a world where everything will be tokenized and will be passed around in a safe fashion.”

In China, cryptocurrencies and crypto mining are illegal, but blockchain is an important part of President Xi Jinping’s Vision 2035 national development strategy. None of China’s sanctioned blockchains are public. China’s blockchain technology base, including its Blockchain-based Service Network (BSN), which has been described as a digital Silk Road connecting (and monitoring) multiple blockchains, is far outpacing development in the United States.

Two years ago, Blockchain 50 member China Construction Bank built a platform that cuts out Swift, the most widely used interbank system for transferring funds. It recently launched a giant distributed ledger for credit reports that lets bank subsidiaries share information while complying with government privacy regulations.

It has already used its blockchain to give $4.2 billion in credit to 2 million customers and hopes to reach 700 million people by mid-2025. In addition to China Construction Bank, five Chinese companies, including Tencent, WeBank and Alibaba’s Ant Group, feature on this year’s Blockchain 50.

Mastercard’s Miebach thinks crypto’s latest woes might actually speed up adoption of the new technology. “You are going to get more mainstream players in and the regulators are going to show up to address the risks,” he says. “That’s a recipe for this to become a mainstream technology. I think [crypto’s] recent winter storm is going to help.

I report on all things crypto and oversee the Forbes Crypto Confidential newsletter and the annual Forbes Blockchain 50 list which features billion-dollar leaders in distributed ledger

I report on how blockchain and cryptocurrencies are being adopted by enterprises and the broader business community.

Source: How Mastercard, Goldman Sachs And Other “TradFi” Titans Are Using Blockchain To Rewire Global Finance


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New Payment Service Using Same Tech As Zelle And Venmo Will Cut Out Visa And Mastercard Fees

For decades, retailers have protested the fees Visa V -3.3% and Mastercard MA -3.7% charge them to accept credit and debit cards. “Pay by bank” is the latest effort to circumvent those fees by letting people pay directly from their bank accounts. Financial services consulting firm Sionic has partnered with MX, a company that connects fintechs to users’ bank accounts, and Google Cloud Services to launch pay by bank in the United States.

The product lets merchants cut out card acceptance fees, which range from 1% to 3%. Its success in the U.S. depends on whether merchants can incentivize consumers to switch from heavily utilized credit or debit cards. Pay by bank lets consumers bypass Visa and Mastercard’s payment rails and pay directly from their bank account. It’s already popular abroad, particularly in Asia and Europe, but has so far failed to catch on in the U.S. market where 84% of adults have at least one credit card.

While credit and debit cards approach ubiquity in the United States, the card networks are facing scrutiny as interchange fees–charges to merchants to cover the cost of processing transactions–have continued to climb. In 2021, merchants were charged $77.5 billion in credit card fees, which are split between issuing banks and the card networks. In March, Visa and Mastercard were preparing to raise interchange fees even further, the Wall Street Journal reported.

The pay-by-bank product uses the real-time-payments (RTP) network operated by The Clearing House, an organization owned by 23 of the largest banks including Citibank, Wells Fargo WFC -3.1% and HSBC HSBC -1%, with lower fees than the card networks. The Clearing House’s real-time-payments network is also used by Venmo and Zelle to facilitate money transfers. Launched in 2017 in America, RTP aims to speed up bank transfers so they settle instantly – that’s a stark contrast to the days it can take to settle most bank transfers over the ACH network.

“We’re reallocating the control of that merchant-customer relationship away from those expensive rewards credit cards into the hands of the merchants,” CEO and founder of Sionic Ron Herman said. Customers use Sionic’s pay-by-bank option, called ULink, by scanning a QR code at checkout. The option could also appear to consumers as a button within their mobile banking apps. For security, the technology “tokenizes” user account information.

“The merchant never sees the account number for the individual that’s paying because they didn’t present a debit card, they presented a token to the merchant,” says Elizabeth McQuerry, a partner at payments consulting and research firm Glenbrook Partners. With ULink, MX’s technology confirms a customer has the balance available to cover the transaction, and the fund transfer occurs within seconds over the RTP network.

There is no risk merchants will not receive payment or that the customer will overdraft their account. However, once the transaction has occurred, there are fewer options for recourse if there is a dispute. For example, if a consumer orders something online and it never arrives, they will either have to settle the dispute with the merchant or ask their bank to issue a refund.

Card networks have more experience handling fraud and protect customers through things like Visa’s zero liability policy, which requires banks to cover card holders in the event of a fraudulent transaction. “We know Visa is and will remain one of the most cost effective and secure ways to pay and be paid – offering superior functionality and benefits to merchants and consumers at a competitive cost,” a Visa spokesperson said.

Merchants who want customers to use pay by bank will want to handle disputes swiftly, similarly to how Amazon AMZN -4.8% has built customer loyalty through generous refund policies. Merchants eager to accept pay by bank could incentivize consumers to switch over by offering rewards or discounts for using the service. Some merchants are ahead of the curve, offering their own card programs similar to pay by bank.

The Target TGT -4.1% Red Debit card, for example, works by transferring customer funds directly from their bank account to Target’s. In return for using the product, Red Card customers receive up to 5% cash back on their purchases. In addition to avoiding interchange fees, the Red Card gives Target greater control over the customer experience and more access to offer new promotions or products.

Plaid, an MX competitor and one of the most valuable private fintech companies in America, does not currently offer a pay-by-bank service or utilize the RTP network. In 2020, when Visa announced plans to acquire Plaid for $5.3 billion, the Department of Justice blocked it saying that Visa was trying to “eliminate this competitive threat to its online debit business before Plaid had a chance to succeed.”

Visa denied the allegations, claiming that Plaid’s business is “complementary to Visa’s, not competitive.” Mastercard made its move into pay by bank in 2016 by acquiring Vocalink, which offers the service throughout the United Kingdom. Sionic’s product isn’t the first time pay by bank has attempted to gain traction in the United States. In 2014, Merchant Customer Exchange, a payments company owned by a group of big box retailers including Walmart WMT -3.1%, attempted to launch a pay-by-bank product called CurrentC.

The initiative was shut down two years later after failing to gain traction with consumers. Even if merchants are eager to spur adoption, changing consumer payment habits is a slow process, especially when many are accustomed to a quick and simple card experience. It is unclear if Google Cloud Services’ involvement in Sionic’s pay-by-bank product foreshadows bigger plans for the tech giant, since Google has been working on payment technology for over a decade.

Its products have moved through several iterations. In May, Google Pay (a competitor to Apple Pay) was rebranded to Google Wallet. The most recent version is a digital wallet designed to store card information, in addition to tickets or vaccination cards. Last year, the company ditched plans to offer Google Pay users the option to sign up for checking accounts and debit cards through a program called Google Plex.

Given Google Wallet’s history, it wouldn’t be too far a leap for the company to add pay by bank. “The Sionic and MX announcement is likely to be warmly embraced by Google Wallet, which abandoned its own efforts known as Google Cache and Google Plex to provide a direct pay-by-bank option,” CEO and founder of payments firm Crone Consulting, Richard Crone, said.

I cover fintech for the money team at Forbes. I am an NYU graduate with bylines at AMNewYork, Gotham Gazette, and Prague Daily Monitor.

Source: New Payment Service Using Same Tech As Zelle And Venmo Will Cut Out Visa And Mastercard Fees

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Crypto Investing In 2022 What Can You Look Forward To

2021 was a year of epic growth for cryptoassets. We saw the market take a big leap towards maturity as trends such as non-fungible tokens (NFTs) and the metaverse gained momentum, and regulators contended with the asset class’s growing role in the global economy.

More rapid change can be expected in the year ahead, with the crypto market hitting maturity amidst a changing macro environment and red hot inflation readings. In five concise trends, here is what you should be watching as we move into 2022.

1. NFTs move beyond JPEGs

Non-fungible tokens (NFTs) hit the mainstream in 2021. Brand names from Adidas to Budweiser and Pepsi to Warner Bros issued their own collections,  sports fans rushed to buy tokenized cards for their teams on platforms such as Chiliz, and luxury fashion houses including Givenchy dropped tokens to heighten exclusivity.

All of this demonstrated the revolutionary potential of the “NFT” — which was proclaimed Collin’s Dictionary’s word of the year.As we move into 2022, NFTs are set to move beyond just collectible JPEGs. The NFL is now working with Polygon to use NFTs for ticketing, TikTok has released trending videos as NFTs, and a diverse range of companies are starting to use the unique tokens to power radical change in how products are funded, licensed and promoted.

2. Blockchain gaming and metaverse boom

2021 saw the rise of a younger, faster generation of blockchains such as Solana, which offer the high performance needed for sophisticated blockchain-based gaming.Meanwhile, the first crypto games hit the big time. Axie Infinity attracted almost 2 million daily users with play-to-earn mechanisms, and investment poured into metaverse projects from all angles:

Facebook rebranded to Meta and tech giants Microsoft and Amazon dipped their toes, while venture capitalists committed billions to making the metaverse reality.Moving into 2022, this sector of the market is primed to hit the mainstream. All we are waiting for is the catalyst of a high-quality game or social platform that can bring in a broad audience beyond just crypto enthusiasts.

3. Layer 2s steal the limelight

The popularity of decentralized finance (DeFi) and NFTs has created bottlenecks on Ethereum, with congestion pushing network fees to all-time highs.Against this backdrop, Layer 2 scaling solutions such as Polygon (MATIC) have experienced epic growth by offering faster speeds and lower fees with no compromise to decentralization or security.

This trend is set to accelerate in 2022, boosted by new cryptographic innovations — such as Optimistic Rollups and Zero-Knowledge Rollups — which are finally ready for action after years of development.

4. Crypto payments hit the mainstream

2021 showed that payment giants see crypto not as a threat, but as an opportunity: Visa launched a crypto advisory service, Mastercard introduced crypto support, and WhatsApp began testing crypto payments via the Novi wallet.Governments have seen the potential of crypto payments too. El Salvador claimed to be saving $400 million a year in  Western Union fees by using Bitcoin remittances, and a parallel government in Myanmar adopted Tether as an official currency.

These events could be the first signs of a global transformation in payments and remittances; one that is likely to gain momentum in 2022 as more organizations realize that money can be exchanged instantly and inexpensively — as easily as sending an email.

5. Even more regulatory scrutiny

With former blockchain professor Gary Gensler leading the charge at the U.S. Securities and Exchange Commission (SEC), authorities around the world are racing to roll out regulatory frameworks.In the US, regulators are discussing a “crypto sprint” to quickly bring the industry into line, while across the Atlantic, the European Union’s (EU) proposed regulatory framework — Markets in Crypto Assets (MiCA) — is close to becoming law.

This activity will likely mean more scrutiny than ever before for the digital asset ecosystem, but if the approval of multiple Bitcoin ETFs around the world and the positivity of the recent US congressional crypto hearing are any indication, then 2022 could be the year we see regulators cautiously embrace cryptoassets.

Source: Crypto investing in 2022 – what can you look forward to?



Pete Howson, a senior lecturer in international development at Northumbria University in Britain, said 2022 is likely to see “stronger public opposition” to bitcoin on environmental grounds, which could force regulators to act more decisively.

A YouGov poll in October found nearly half of Britons supported banning cryptocurrencies to fight climate change.Scandinavian countries have voiced support for a potential ban on bitcoin mining across Europe, and, if that happens, authorities elsewhere might be driven to take a similar stance, said Howson.

“Massive power outages caused 700 deaths in Texas this time last year … and since then, we’ve seen the U.S. overtake China as the bitcoin global superpower, with much of that extra burden added to the Texas grid,” he said. “If again we see ordinary folks freeze to death in places like Texas, the bitcoin bros will be out on their ears.”

At the same time, the industry could be pressured into addressing its “sustainability challenges”, according to Alexander Hoptner, who heads BitMEX, one of the world’s largest virtual currency derivatives exchanges.

In November, the company said it had gone carbon neutral, offsetting emissions from its bitcoin transactions and servers by buying $100,000 in CO2 credits, a model some green groups criticise, saying it simply gives major polluters a way to avoid cutting their own carbon output.

“We’ve already had very encouraging chats with other exchanges, protocols, and organisations who are keen to work together to help lower the environmental impact of crypto,” said Hoptner. “I think 2022 will be the year that the crypto industry comes together to answer those who’ve challenged us to seize this responsibility.”

“Central banks around the world are bowing to the reality that digital payments are becoming the norm,” he said.”Maintaining the relevance of central bank money in retail transactions necessitates the creation of digital versions of their currencies.”From Russia to Chile, many countries have started to look into CBDCs, with tests and rollouts scheduled for 2022.Some, like Japan and Sweden, have already started trials….

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Austrian Programmer And Ex Crypto CEO Likely Stole $11 Billion Of Ether

Ethereum, the second biggest crypto network, is worth $360 billion. Its creator, Vitalik Buterin, has more than 3 million Twitter followers, has made videos with Ashton Kutcher and Mila Kunis, and has met with Vladimir Putin. All the most popular trends in crypto over the last several years launched on Ethereum: initial coin offerings (ICOs), decentralized finance (DeFi), non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs). And it has spawned a whole class of blockchain imitators, often called “Ethereum killers.”

Ethereum is also the subject of a great mystery: who committed the largest theft of ether (Ethereum’s native token) ever, by hacking The DAO? The decentralized venture capital fund had raised $139 million in ether (ETH) by the time its crowd sale ended in 2016, making it the most successful crowdfunding effort to that date. Weeks later, a hacker siphoned 31% of the ETH in The DAO—3.64 million total or about 5% of all ETH then outstanding—out of the main DAO and into what became known as the DarkDAO.

Who hacked The DAO? My exclusive investigation, built on the reporting for my new book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, appears to point to Toby Hoenisch, a 36-year-old programmer who grew up in Austria and was living in Singapore at the time of the hack. Until now, he has been best known for his role as a cofounder and CEO of TenX, which raised $80 million in a 2017 initial coin offering to build a crypto debit card—an effort that failed.

The market cap of those tokens, which spiked at $535 million, now sits at just $11 million.After being sent a document detailing the evidence pointing to him as the hacker, Hoenisch wrote in an email, “Your statement and conclusion is factually inaccurate.” In that email, Hoenisch offered to provide details refuting our findings—but never answered my repeated follow-up messages to him asking for those details.

To put the enormity of this hack in perspective, with ETH now trading around $3,000, 3.64 million ETH would be worth $11 billion. The DAO theft famously and controversially prompted Ethereum to do a hard fork—where the Ethereum network split into two as a way to restore the stolen funds—which ultimately left the DarkDAO holding not ETH, but far less valuable Ethereum Classic (ETC). The proponents of the fork had hoped ETC would die out, but it now trades around $30. That means the descendant wallets of the DarkDAO now hold more than $100 million in ETC—a high dollar monument to the biggest whodunnit in crypto.

Last year, as I was working on my book, my sources and I, utilizing (among other things), a powerful and previously secret forensics tool from crypto tracing firm Chainalysis, came to believe we had figured out who did it. Indeed, the story of The DAO and the six-year quest to identify the hacker, shows a lot about just how far the crypto world and the technology for tracking transactions have both come since the first crypto craze. Today, blockchain technology has gone mainstream. But as new applications arise, one of the first uses of crypto—as an anonymity shield—is in retreat, thanks to both regulatory pressure and the fact that transactions on public blockchains are traceable.

Since Hoenisch won’t talk to me, I can only speculate about his possible motives; back in 2016 he identified technical vulnerabilities in the DAO early and may have decided to strike after concluding his warnings weren’t being taken seriously enough by the creators of the DAO. (One of his TenX cofounders, Julian Hosp, an Austrian medical doctor who now works in blockchain full time, says of Hoenisch:

“He is a person that is super opinionated. Always believed he was right. Always.”) Looked at from that perspective, this is also a tale of the big brains and big egos that drive the crypto world–and of a hacker who may have justified his actions by telling himself he simply did what the faulty code baked into The DAO allowed him to do.

In early 2016, the Ethereum network was not even a year old, and there was only one app on it that people were interested in: The DAO, a decentralized venture fund built with a smart contract that gave its token holders the right to vote on proposals submitted for funding. It had been created by a company named, which, instead of seeking traditional venture capital, had decided to create this DAO and then open it up for crowdfunding—with the expectation that its own project would be one of those funded by The DAO.’s team thought The DAO might attract $5 million.

Yet when the crowd sale opened on April 30th, it took in $9 million in just the first two days, with participants exchanging one ether for 100 DAO tokens. As the money poured in, some on the team felt queasy, but it was too late to cap the sale. By the time the funding closed a month later, 15,000 to 20,000 individuals had contributed, The DAO held what was then 15% of all ether and the price of the cryptocurrency was steadily rising. At the same time, a variety of security and structural concerns were being raised about The DAO, including one that would, ironically, later prove to be crucial to limiting the hacker’s immediate access to the spoils.

That problem: withdrawing funds was too hard. Someone wanting to retrieve their money had to first create a “child DAO” or “split DAO,” which required not only a high degree of technical knowledge, but also waiting periods after each step and the agreement of anyone else who moved funds into that child DAO.

On the morning of June 17th, ETH reached a new all-time high of $21.52, making the crypto in The DAO worth $249.6 million. When American Griff Green woke up that morning in Mittweida, Germany (he was staying in the family home of two brothers who were cofounders), he had a message on his phone from a DAO Slack community member who said something weird was happening— it looked like funds were being drained.

Green,’s first employee and community organizer, checked: there was indeed a stream of 258-ETH (then $5,600) transactions leaving The DAO.  By the time the attack stopped a few hours later, 31% of the ETH in The DAO had been siphoned out into the DarkDAO. As awareness of the attack spread, ether had its highest trading day ever, with its price plummeting 33% from $21 to $14.

Split Fortunes

The 2016 DAO crowdfunding sale drove the price of ether (ETH) to a then record high—until the June 17th attack on The DAO sent it plummeting. After the hard fork on July 20th, the old blockchain began trading as ether classic (ETC).

Soon, the Ethereum community pinpointed the vulnerability that enabled this theft: the DAO smart contract had been written so that any time someone withdrew money, the smart contract would send the money first, before updating that person’s balance. The attacker had used a malicious smart contract that withdrew money (258 ETH at a time), then interfered with the updating of the contract, allowing them to withdraw the same ether again and again. It was as if the attacker had $101 in their bank account, withdrew $100 at a bank, then kept the bank teller from updating the balance to $1, and again requested and received another $100.

Even worse, once the vulnerability became public, the remaining 7.3 million ETH in The DAO was at risk of a copycat attack. A team of white hat hackers (that is, hackers acting ethically) formed and used the attacker’s method to divert the remaining funds into a new child DAO. But the attacker still had about 5% of all outstanding ETH, and even the rescued ether was vulnerable, given the flaws in The DAO. Plus, the clock was ticking down to a July 21st deadline—the first date when the original hacker might be able to get at the funds they had diverted into the DarkDao.

If the community wanted to keep the attacker from cashing out, they would need to put tokens in the hacker’s DarkDAO and then in any future “split DAOs” (or child DAOs) the unknown hacker created. (Under the rules of the DAO smart contract, the attacker couldn’t withdraw funds if anyone else in their split DAO objected.) Bottom line: if the white hats ever missed their window to object, the attacker would be able to abscond with the funds—meaning this informal group would have to be constantly vigilant.

Eventually, after much bickering (on Reddit, on a Slack channel, over email and on Skype calls) and Ethereum founder Buterin publicly weighing in, and after it seemed that a majority of the Ethereum community supported the measure, Ethereum did a “hard fork.” On July 20th the Ethereum blockchain was split into two. All the ETH that had been in the DAO was moved to a “withdraw” contract which gave the original contributors the right to send in their DAO tokens and get back ETH on the new blockchain. The old blockchain, which still attracted some supporters and speculators, carried on as Ethereum Classic.

• • •

On Ethereum Classic, The DAO and the attacker’s loot (in the form of 3.64 million ETC) remained. That summer, the attacker moved their ETC a few hops away to a new wallet, which remained dormant until late October, when they began trying to use an exchange called ShapeShift to cash the money out to bitcoin. Because ShapeShift didn’t at that time take personally identifying information, the attacker’s identity was not known even though all their blockchain movements were visible.

Over the next two months, the hacker managed to obtain 282 bitcoins (then worth $232,000, now more than $11 million). And then, perhaps because ShapeShift frequently blocked their attempted trades, they gave up cashing out, leaving behind 3.4 million Ether Classic (ETC), then worth $3.2 million and now more than $100 million.

That might have been the end of the story—an unknown hacker sitting on a fortune he couldn’t cash out. Except last July, one of my sources involved in the DAO rescue, a Brazilian named Alex Van de Sande (aka Avsa) reached out, saying the Brazilian Police had opened an investigation into the attack on The DAO — and whether he might be a victim or even the hacker himself.  Van de Sande decided to commission a forensics report from blockchain analytics company Coinfirm to help exonerate himself (though then, the police closed the investigation, he said). In case any similar situations arose in the future, he went forward with the report examining those cash-out attempts in 2016.

Among the early suspects in the hack had been a Swiss businessman and his associates, and in tracing the funds, Van de Sande and I also found another suspect: a Russia-based Ethereum Classic developer. But all these people were in Europe/Russia and the cash-outs mapped onto an Asian-morning-through-evening schedule—from 9 A.M. to midnight Tokyo time—when the Europeans were likely sleeping. (The timing of their social media posts suggested they kept fairly normal hours.) But based on a customer support email the hacker had submitted to ShapeShift in the leadup to the attack, I believed they spoke fluent English.

Jumping off from the Coinfirm analysis, blockchain analytics company Chainalysis saw the presumed attacker had sent 50 BTC to a Wasabi Wallet, a private desktop Bitcoin wallet that aims to anonymize transactions by mixing several together in a so-called CoinJoin. Using a capability that is being disclosed here for the first time, Chainalysis de-mixed the Wasabi transactions and tracked their output to four exchanges. In a final, crucial step, an employee at one of the exchanges confirmed to one of my sources that the funds were swapped for privacy coin Grin and withdrawn to a Grin node called (Due to exchange privacy policies, normally this sort of customer information would not be disclosed.)

The IP address for that node also hosted Bitcoin Lightning nodes:,, etc., and was consistent for over a year; it was not a VPN.

It was hosted on Amazon Singapore. Lightning explorer 1ML showed a node at that IP called TenX.

For anyone who was into crypto in June 2017, this name may ring a bell. That month, as the ICO craze was reaching its initial peak, there was an $80 million ICO named TenX. The CEO and cofounder used the handle @tobyai on AngelList, Betalist, GitHub, Keybase, LinkedIn, Medium, Pinterest, Reddit, StackOverflow, and Twitter. His name was Toby Hoenisch.

Where was he based? In Singapore.

Although he was German-born and raised in Austria, Hoenisch is fluent in English.

The cash-out transactions occurred mainly from 8 A.M. until 11 P.M. Singapore time.

And the email address used on that account at the exchange was [name of exchange]

In May 2016, as it was finishing up its historic fundraise, Hoenisch was intensely interested in The DAO. On May 12, he emailed Hosp a tip (“Profitable crypto trade coming up”) to short ETH once the DAO crowdfunding period ended. On May 17th and 18th, in the DAO Slack channel, he engaged in a long conversation in which he made, depending on how you count, 52 comments, minimum, about vulnerabilities in The DAO, getting into various aspects of the code and nitpicking over exactly what was possible given the way the code was structured.

One issue spurred him to email’s chief technology officer, Christoph Jentzsch, its lead technical engineer, Lefteris Karapetsas, and community manager Griff Green. In his email, he said he was writing a proposal for funding from The DAO for a crypto card product called DAO.PAY, and added, “For our due diligence, we went through the DAO code and found a few things that are worrisome.” He outlined three possible attack vectors and later emailed with a fourth. Jentzsch, a German who had been working on a PhD in physics before dropping out to focus on Ethereum, responded point by point, conceding some of Hoenisch’s assertions but saying others were “false” or “don’t work.” The back and forth ended with Hoenisch writing; “I’ll keep you in the loop if we find anything else.”

But instead of further email exchanges, on May 28th, Hoenish wrote four posts on Medium, beginning with, “TheDAO—risk free voting.” The second, “TheDAO—blackmailing withdrawals,” foreshadowed the main issue with The DAO and why Ethereum ultimately chose to hard fork: if it did not, the only other options were to let the attacker cash out his ill-gotten gains or for some group of DAO token holders to follow him forever into new split DAOs he created as he attempted to cash out. “TLDR: If you end upon in a DAO contract without majority voting power, then an attacker can block all withdrawals indefinitely,” he wrote. The third showed how an attacker could do this cheaply.

To put the enormity of this hack in perspective, with ETH now trading around $3,000, 3.64 million ETH would be worth $11 billion.

His last, most telling post for the day, “TheDAO—a $150m lesson in decentralized governance,” said DAO.PAY decided against making a proposal after uncovering “major security flaws” and that “Slockit down-played the severity of the attack vectors.” He wrote, “TheDAO is live … and we are still waiting for Slockit to put out a warning that THERE IS NO SAFE WAY TO WITHDRAW!”

On June 3, his last Medium post, “Announcing BlockOps: Blockchain Hack Challenges” said, “BlockOps is your playground to break encryption, steal bitcoin, break smart contracts and simply test your security knowledge.” Although he promised to “post new challenges in the field of bitcoin, ethereum and web security every 2 weeks,” I could find no record that he did so.

Two weeks later came the DAO attack. The morning after the attack, at 7:18 A.M. Singapore time, Hoenisch trolled Ethereum creator Vitalik Buterin by retweeting something Buterin had said before The DAO was attacked, but after it was known that the vulnerability used in the attack was evident in the DAO’s code. In the two-week old tweet, Buterin had said that he’d been buying DAO tokens since the security news. Over the following weeks, Hoenisch tweeted anti-hard fork posts like one titled, “Too Big to Fail is Failure Guaranteed.”

Curiously, on July 5, a couple weeks after the attack, Hoenisch and Karapetsas exchanged Reddit DMs titled “DarkDAO counter attack” — though the substance of the messages is unclear because Hoensich has deleted all his Reddit posts. (Hosp recalls that Hoenisch told him he had deleted his Reddit account after an altercation with an “idiot” on Reddit over The DAO.) Hoenisch wrote, “Sorry for not contacting first. I got carried away from finding it and telling the community that there is a way to fight back. In any case, I don’t see any way the attacker can use this.”

After Karapetsas told Hoenisch of the white hats’ plans to protect what was left in The DAO, Hoenisch replied, “I took down the post.” Karapetsas responded, “I will keep you up to date with what we do from now on.” Hoenisch’s last message in that exchange: “I’m sorry if I messed up the plan.”

On July 24th, the day after the Ethereum Classic chain revived and began trading on Poloniex, Hoenisch tweeted, “ethereum drama escalating: from #daowars to #chainwars. Ethereum classic now traded on poloniex as $ETC and miners planning attacks.” On July 26th, he retweeted Barry Silbert, the founder and CEO of the powerful and well-respected Digital Currency Group, who had tweeted, “Bought my first non-bitcoin digital currency…Ethereum Classic (ETC).”

“He (the DAO hacker) really screwed the pooch. Reputation is way more valuable than money.”

Upon hearing the name Toby Hoenisch, without knowing evidence indicated he was the DAO attacker, Karapetsas, a usually good-humored Greek software developer who was one of the DAO creators and had engaged with him by email and on Reddit, said: “He was obnoxious…. he was quite insistent on having found a lot of problems.”

After hearing that the DarkDAO ETC had been cashed out to a Grin node with Hoenisch’s alias, Karapetsas observed that if Hoenisch had instead remedied the situation while the DarkDao funds were frozen, the Ethereum community would have given him “huge kudos” for finding the weakness and then returning the ETH. Similarly, Griff Green, whose current projects lean towards helping non-profit and public causes grow in the digital world, believes the hacker missed the chance to “be a hero.” Says Green: “He really screwed the pooch…Reputation is way more valuable than money.”

Ironically, in a 2016 blog post, Hoenisch wrote, “I’m a white hat hacker by heart.’’ Twenty days later came the DAO attack.

As I noted earlier, after being sent a document laying out the evidence that he was the hacker and asking for comment for my book, Hoenisch wrote that my conclusion is “factually inaccurate.” He said in that email he could give me more details—and then did not respond to four requests for those details, nor to additional fact checking queries for this article. In addition, after receiving the first document detailing the facts I’d gathered, he deleted almost all his Twitter history (though I’ve saved the relevant tweets).

In May 2015, Hoenisch and the cofounders of his crypto debit card venture—first known as OneBit—had some success at a Mastercard Masters of Code hackathon in Singapore. They started making the card available that year on an invitation-only basis, because, as Hoenisch explained on Reddit, “We don’t want to launch a half-assed Bitcoin wallet that gets us in trouble for violating KYC (know your customer) laws. And yes, legal is the main reason we can’t just ship it.” A Bitcoin Magazine article at the time said Hoenisch had a background in AI, IT security and cryptography.

In early 2017, just months after the presumed DAO attacker stopped trying to cash out their ETC, Hoenisch’s team—by then operating as TenX—announced it had received $1 million in seed funding from (among others) Fenbushi Capital, where Ethereum founder Buterin was a general partner. Then came the $80 million ICO. In early 2018, things started to go south for TenX when its card issuer, Wavecrest, was booted from the Visa network, meaning that TenX’s users could no longer use their debit cards.

On Oct. 1, 2020, TenX announced it was sunsetting its services because its new card issuer, Wirecard SG, had been directed by the Monetary Authority of Singapore to cease operations. On April 9, 2021, TenX posted a blog called “TenX, Meet Mimo.” It outlined a new business that would offer a euro-pegged stablecoin, which kept its value pegged to a fiat currency such as US dollars or euros or Japanese Yen. The market cap of TenX tokens, which spiked at $535 million, now sits at just $11 million. TenX has rebranded itself as Mimo Capital and is offering holders of TenX tokens mostly worthless MIMO tokens instead at a rate of 0.37 MIMO for each TenX.

Hosp, who was the public face of the company while there, was booted by Hoenisch and another cofounder in January 2019. This occurred a couple months after some crypto publications reported on Hosp’s past affiliation with an Austrian multi-level marketing scheme. However, before hearing that evidence indicated Hoenisch was the DAO attacker, Hosp said his feeling had been that Hoenisch had perhaps pushed him out over jealousy that Hosp had sold bitcoin at the top of the bubble in late 2017, netting himself $20 million. Meanwhile, Hoenisch had kept all his crypto as the bubble – and his personal net worth – deflated.

“He came from a very poor family, he had no experience in investing, and he was in crypto in 2010 but he had literally no money, nothing, when we were in Las Vegas together [in the summer of 2016] he had nothing, and I was doing really well with my investments… he would always push for getting more salary, for having something nicer.” Hosp also mentioned Hoenisch had to send money home to his mother, who had raised him, as well as his sister and brother, as a single parent.

As new blockchain applications arise, one of the first uses of crypto—as an anonymity shield—is in retreat.

Upon hearing that Hoenisch was the likely DAO attacker, Hosp said he was “getting goose bumps” and begin recalling details from his interactions with his former partner that now seemed to take on new significance. For example, when asked if Hoenisch was into Grin (the privacy coins to which the hacker had cashed out) Hosp said, “Yes! Yes, he was. He was fascinated by that…I lost money because of those stupid coins! I invested in them because of him, because he was so fascinated by them.”

He said that Hoenisch was also obsessed with building a Bitcoin/Monero “atomic swap” – or a way to use smart contracts to swap between Bitcoin and the privacy coin Monero. At the time, Hosp was confused by that, because he felt there was no market for such a product. Later, Hosp pulled up chats from August 2016, in which Hoenisch seemed excited about the price of ETC, the coin held by the hacker after the ethereum fork.

When trying to recall the incident that he believed prompted Hoenisch to close his Reddit, Hosp began searching on his computer and muttered to himself, “He always used tobyai.” He confirmed that one of Toby’s regular email addresses ended in

Recalled a still astounded Hosp: “For some weird reason, he was quite well aware of what was happening…He understood more of the DAO hack when I asked him what had happened…than I had found on the internet or anywhere.”


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Follow me on Twitter or LinkedIn. Check out my website.

A former senior editor of Forbes, I’m a crypto journalist, host of the Unchained podcasts, and author of The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze.

Source: Exclusive: Austrian Programmer And Ex Crypto CEO Likely Stole $11 Billion Of Ether


Recent News

Crypto Cards Are Giving Bitcoin Purchase Power

Spending your cryptocurrency was once a headache-inducing endeavour. Not only did few merchants accept bitcoin as a medium of exchange, but without access to the now ubiquitous fiat off-ramps, you had to source a buyer willing to exchange fiat for digital. That entailed a degree of risk since peer-to-peer marketplaces that protected users with an escrow system didn’t exist.

What a difference a couple of years makes. These days it’s easy to use bitcoin and ether to buy goods and services online, in the metaverse, and in the meatspace, with payment gateways handling conversion at the point of sale. The spender authorizes the transaction while the processor converts their crypto into fiat in real time, de-risking the transaction for merchants sceptical of accepting volatile virtual currencies. Everyone’s a winner.

Debit Card Meets Digital Value

Of all the infrastructure put in place since the emergence of the digital asset sector, few have done as much to accelerate mainstream adoption as crypto-friendly debit cards. Payment giants Visa and Mastercard have rolled out support for cryptocurrencies on their vast networks, giving users access to their crypto portfolios and the ability to quickly and cheaply convert them into traditional currencies for spending purposes.

This is not a globally acceptable solution as many countries take a hard line stance against cryptocurrencies, with financial laws in place that ban citizens from buying, selling or even holding them. A crypto-fiat card, convenient as it may be, won’t be of much use in Algeria or Bolivia. But in countries where Visa and Mastercard are accepted, your purchase power is assured.

Explaining its shifting attitude towards the digital economy earlier this year, Mastercard wrote that it “isn’t here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants and businesses to move digital value, traditional or crypto, however they want. It should be your choice, it’s your money.”

Mastercard’s growing crypto partner network now includes wallet application Wirex, bitcoin payment service provider BitPay, digital asset manager Bakkt, and FDIC-insured mobile banking application LVL. Last week, the company announced that it was also joining forces with five startups to “solve global blockchain challenges” as part of its Start Path Crypto accelerator program.

As well as LVL, the companies participating in the program include smart-contract builder Ava Labs, AI-centric mobile banking app Envel, peer-to-peer savings platform Kash, and crypto rewards platform NiftyKey. Three more leading cryptocurrency service providers in the Asia Pacific region, Amber, Bitkub and CoinJar, will soon be launching crypto-funded Mastercard payment cards.

Visa has embraced digital assets with an equal fervour, having teamed up with over 60 crypto platforms including Circle, BlockFi, Coinbase, FTX and Anchorage. The firm even launched its own Global Crypto Advisory Practice last year, pitched at financial institutions keen to win or retain customers by expanding their services to include digital currencies, stablecoins, and NFTs.

Much of Visa’s crypto business has been conducted in concert with payments startup Simplex, which specializes in providing users with on and off-ramp capabilities via both credit and debit cards. Simplex was this year acquired by Canadian payments processor Nuvei in a deal worth $250 million, and Nuvei is in turn rolling out branded Visa cards to its partners throughout Europe. There clearly are many different entities responsible for giving crypto more purchase power.

By enabling millions of consumers around the world to spend digital assets with a swipe of the card or smartphone, two non-crypto native firms have struck a surprising blow to the hegemony of traditional financial institutions when it comes to payments. The dominance of traditional players in the payment space has been waning for some time as innovative forms of digital payment have emerged. Square’s Cash App boasts over 40 million monthly active users and digital wallets like Venmo, Revolut, and Wirex have also built large international user bases.

Banks No Longer Payment Kings

Many alternative payment platforms continue to allow users to fund their accounts through connecting their bank accounts. Crypto-friendly debit cards, for example, often display a fiat balance and crypto balance with account-holders able to shift funds accordingly and spend either fiat or crypto at the point of sale. In the future banks could be frozen out altogether. Stablecoins, a digital asset whose value is pegged 1:1 with the US dollar are now being supported on cards. 

Like other cryptocurrencies, stablecoins can be spent like cash anywhere Visa and Mastercard is accepted with cards such as the one offered by crypto platform Voyager Digital, which supports the USDC stablecoin. If many crypto users are only interacting with the legacy fiat system because of its supposed stability, they could turn their banks on fiat entirely by using assets like USDC and USDT as a kind of proxy fiat.

There is another benefit of stabelcoins as cryptoassets like bitcoin often come with a capital gain tax burden, when converted into cash and spent. Stablecoins are better suited to being a medium of exchange.

The debit cards offered by major crypto-native platforms such as Coinbase and, all in partnership with Visa, allow users to spend their trading profits (including those made from selling NFTs) and earn perks such as cashback to inspire loyalty.’s rewards also include free Netflix, Spotify, Amazon Prime and unlimited airport lounge access, with support for around 90 digital assets.

Visa’s various industry partnerships meant that over $1 billion was spent on their crypto-friendly cards in the first half of 2021 alone. While that is a drop in the ocean to a company whose payment volume totalled $8.8 trillion last year, the number is only going up.

“One thing that continues to put people off entering the space is the perceived difficulty of spending cryptocurrencies,” notes Shahaf Bar-Geffen, the CEO of fintech platform COTI, “Banks are slow to adopt which causes issues, so a debit card that’s connected directly to your crypto wallet, and accepted almost anywhere, is probably one of the easiest solutions to a crucial adoption problem.”

Unlike many crypto platforms, COTI is built especially for payments. Its flagship COTI Pay product can process all payment types natively, both online and off, including crypto and stablecoins, credit cards, and even a merchant’s native coin. That said, it too has partnered with Simplex (and by extension, Visa) for its debit cards.

It’s fair to say that crypto-friendly debit cards can offer greater functionality than their fiat equivalents, which for the most part operate solely as payment cards. As well as cashback, they often come with referral bonuses, rebates on different services and even in some cases, lines of credit. The latter feature is offered by wallet maker Ledger’s new Crypto Life card, which allows holders to obtain credit by using cryptocurrency as collateral. While such a thing is common in the burgeoning decentralized finance space, it’s the first time such infrastructure has been available via a card.

The aptly named Crypto Life card will be available to customers in the U.K., France and Germany in the first quarter of 2022, and for US customers in the second quarter, with Ledger Chief Experience Officer Ian Rogers stating that it represents “a step toward replacing traditional bank accounts.”

The gap between traditional finance and crypto is closing, and this can only be a good thing for consumers looking to get more bang for their bitcoin. The crypto debit card landscape is already crowded with competitors, expect the perks to get juicier and the number of supported digital assets to increase in the coming year.

Follow me on Twitter or LinkedIn.

I cover fintech, crypto and digital assets, and sustainable finance and investments, and promote policies for a transparent, secure, and quality digital financial future for everyone.

Source: Crypto Cards Are Giving Bitcoin Purchase Power


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